This action was brought by Clifford G. Lee, Jr., to recover compensatory and punitive damages occasioned by the alleged fraud of the Heights Bank inducing Lee to cosign a promissory note. The Heights Bank counterclaimed for $1,000 plus interest on another note from Lee to the Heights Bank to fulfill his obligation under the first note. The jury returned a verdict for Lee for $25,000 in compensatory damages and $50,000 in punitive damages. Subsequently, the trial court ordered a remittitur and entered judgment for Lee in the amount of $10,993.62 as compensatory damages and $22,000 as punitive damages. The Heights Bank appeals and presents the following issues for review: (1) whether the plaintiff settled or waived his fraud claim against the defendant as a matter of law; (2) whether the closing argument by plaintiff's counsel was improper and prejudicial; (3) whether the court abused its discretion in permitting the jury to return an award of punitive damages against the defendant. The plaintiff's brief raises the issue of whether the court abused its discretion in ordering a remittitur.

On April 29, 1974, Lee's then brother-in-law, Gregory Gordon, as officer and agent of Potpourri Publications, Inc., signed a $7,000 single payment time promissory note, No. 281. The note's due date was June 29, 1974, and was in favor of the Heights Bank (hereinafter Bank). On the same day, Gregory Gordon executed a security agreement for one $10,000 Pacific Telephone and Telegraph Company bond as security for the note, No. 281.

Potpourri Publications, Inc., had a checking account with the Bank. On June 24, 1974, this account had a negative balance of $6,831.44. However, on June 25, 1974, $9,215.44 was deposited into the Potpourri account. The source of the deposit was a check from Hornblower and Weeks which represented the proceeds of the sale of the $10,000 Pacific Telephone and Telegraph bond used to secure note No. 281. Note No. 281, however, went into default four days later on June 29, 1974. It remained in default until September 3, 1974, when Gregory Gordon executed a renewal note (No. 399). This renewal note was cosigned by Lee. It was payable to the Bank in the amount of $6,806.30 and was signed at the Bank's premises. Lee testified that at the time this renewal note was signed, he was assured by Mr. Schafer, the Bank's chief operating officer and executive vice-president, that the note had as collateral a $10,000 Pacific Telephone and Telegraph bond. Lee further testified that the note at the time of signing, on its face, contained language concerning the collateral.

Several weeks before note No. 399 was signed, Lee contacted Schafer about receiving an $8,000 unsecured loan from the Bank. Lee, a real estate broker, sought the loan to finance his purchase of an apartment building. Lee had previously dealt with Schafer in obtaining unsecured loans from the First National Bank of Peoria when Schafer was associated with that institution. Schafer suggested that Lee contact him at a later date, when Schafer was less busy. Schafer, however, indicated to Lee that he didn't see any problem with the unsecured loan, but at the same time made no promises. Thereafter, Lee tried unsuccessfully to contact Schafer several times. Finally, on September 3, 1974, Schafer called Lee, apologizing for not contacting him sooner. Schafer told Lee he needed a favor from him and requested that Lee come to the Bank at 2 p.m. Lee agreed.

Lee then met Schafer and Gregory Gordon who was present in Schafer's office when Lee arrived at 2 p.m. Schafer explained that the Bank examiners were present in the Bank and a problem had developed with Gregory Gordon and Potpourri Publications. Schafer needed Lee's help. When Schafer first explained to Lee that the requested favor was Lee's cosigning, as an accommodation party, a note with Gregory Gordon, Lee refused. Schafer then told Lee the note was fully secured by a $10,000 Pacific Telephone and Telegraph Company bond. When Lee inquired why Schafer needed Lee's signature on a fully secured note, Schafer told him it would help Schafer out with the Bank examiners. When Lee asked Schafer how Schafer knew the note was secured, Schafer showed Lee a copy of the April 29, 1974, security agreement. Reiterating that the note was fully secured, and was without a risk to Lee, Schafer also stated, "you've made a loan request and I am going to help you out, too." After some minutes of deliberation, Lee agreed to cosign the note. According to Lee's testimony, Schafer then produced a blank note which Lee refused to sign. Thereafter, Schafer produced another note, No. 399, for Lee's signature; this note expressly provided, "This Note is secured by Security Agreement dated April 29, 1974." Lee cosigned this note and returned the note to Schafer.

After Lee cosigned the note, Lee reiterated his request for an $8,000 unsecured loan; Schafer replied he was too busy then, September 3, 1974, to discuss it, and invited Lee to call him the following week.

On September 11, 1974, Lee called and arranged an appointment with Schafer to discuss his $8,000 loan request. At their meeting that afternoon, Schafer informed Lee that the Bank's loan committee was insisting on $8,000 in security for the loan. Although objecting to "being loaned his own money," Lee acquiesced, went to his Jefferson Bank safety deposit box, obtained $8,000 worth of Commercial National and Jefferson Bank certificates of deposit, and offered to post these as security for the loan. Schafer refused, saying the Bank would only accept its own certificates of deposit as collateral for the loan. Since Lee had long awaited the $8,000 loan from the Bank and was running short on time to consummate his real estate purchase, he proceeded with the loan on the Bank's terms. He cashed in his certificates of deposit from Commercial National and Jefferson Bank and established two $4,000 certificates of deposit at the Heights Bank.

About three months later, in December 1974 or January 1975, Lee was contacted by Schafer and told that the note that he cosigned with Gregory Gordon was in default. Lee was told to pay the amount due on the note. When Lee advised Schafer that the Bank should and could with Lee's permission sell the collateral, Schafer replied, "There is no collateral * * * you're going to have to pay this note." Lee replied, "There is something wrong here; I'm not going to pay that note because it was purported to me that there was collateral." Lee then hung up the telephone.

Sometime in March 1975, Lee and Gregory Gordon signed and delivered to the Bank a "Notice of Dishonor" disclaiming all responsibility for payment on the note and reserving all rights and defenses.

By 1976, Schafer was no longer employed by the Bank and Kenneth Dickey was the Bank's vice-president and chief operating officer. Lee contacted Dickey by phone in early 1976. Dickey told Lee that he had to pay note No. 399 as it was in default. The two men met personally in April 1976. Lee told Dickey that he could not understand how he could owe on a note when there was collateral. Dickey informed him that "There is no collateral on the note. The collateral has been sold." Dickey again urged that the note had to be paid by Lee as the Bank could not collect from Gregory Gordon. Dickey reminded Lee about his certificates of deposit with the Bank and that the Bank could use them to pay the debt owed on the overdue note, No. 399. The process would be easy for the Bank but would ruin Lee's excellent credit rating. Dickey suggested that the two of them meet with James Kellstedt, who was represented to be the attorney for the Bank.

Later in the spring of 1976, Lee met with Dickey and attorney James Kellstedt. At this meeting, Lee was again informed that, since the Bank could not collect from Gregory Gordon, the Bank was looking to Lee for payment.

Dickey and Kellstedt explained that, unless Lee agreed to pay the note, the Bank would sue him or apply his certificates of deposit toward payment on the overdue note. When Lee repeatedly insisted that the overdue note was secured, he was told there was no collateral that it had been sold. When Lee queried how the Bank could sell the collateral without applying the proceeds toward the note, Dickey and Kellstedt advised Lee to forget about the collateral and unless Lee paid the note, the Bank would take Lee's certificates of deposit or sue him. Lee "felt intimidated at this point" and asked what could be worked out. The ...

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